Bank Garnishment Procedures

Banker Resource August 1, 2012 — 1,914 views

Wage garnishment is a legal procedure in which a person’s earnings are withheld by their employer to pay a debt, such as child support or student loans. According to the United States Department of Labor, bank garnishment orders can only occur following a court order.

A new federal rule that became effective on May 1, 2011, limited creditors’ ability to garnish bank accounts that contain Social Security, Supplemental Security Income (SSI) and veterans or other federally backed benefits, according to Legal Services of North Dakota. These protections will continue after benefits are deposited in an individual’s bank account.

Before this, wage garnishment orders and writs did not distinguish between where the income was coming from or different types of accounts. While federal benefits recipients were allowed to challenge the garnishment order, many lacked the knowledge, experience or the resources to appropriately defend themselves, and funds provided by the government were often taken away and paid to creditors backed by a court order.

The new bank garnishment procedures are expected to reduce confusion over the entire process.